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September 2013

2013 (31) STR 77 (Tri-Delhi) CCEx, Chandigarh vs. Facinate Advertising & Marketing.

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Incentives received in the course of advertising services – Not taxable. Bad debts and discounts are deductible for payment of service tax.

Facts:
The Revenue challenging the decision of CCE (Appeals) contended that incentives received by an advertising agency, bad debts and cash discounts were taxable and thus to be included in the taxable value.

Held:
The Hon. Tribunal dismissing the appeal held that incentive was a receipt for appreciation of performance of services which was not known while providing the said service. Bad debts were on account of non-receipt of consideration and, similarly cash discounts were also not received. Thus, they do not enter into the realm of receipt of consideration to be included in the taxable value.

(Note: The period in dispute appears to be pertaining prior to the introduction of Point of Taxation Rules, 2011).

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